Correlation Between Cerrado Gold and Novo Resources
Can any of the company-specific risk be diversified away by investing in both Cerrado Gold and Novo Resources at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Cerrado Gold and Novo Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cerrado Gold and Novo Resources Corp, you can compare the effects of market volatilities on Cerrado Gold and Novo Resources and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Cerrado Gold with a short position of Novo Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cerrado Gold and Novo Resources.
Diversification Opportunities for Cerrado Gold and Novo Resources
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cerrado and Novo is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Cerrado Gold and Novo Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novo Resources Corp and Cerrado Gold is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Cerrado Gold are associated (or correlated) with Novo Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novo Resources Corp has no effect on the direction of Cerrado Gold i.e., Cerrado Gold and Novo Resources go up and down completely randomly.
Pair Corralation between Cerrado Gold and Novo Resources
Assuming the 90 days horizon Cerrado Gold is expected to generate 0.96 times more return on investment than Novo Resources. However, Cerrado Gold is 1.04 times less risky than Novo Resources. It trades about 0.26 of its potential returns per unit of risk. Novo Resources Corp is currently generating about 0.09 per unit of risk. If you would invest 23.00 in Cerrado Gold on October 29, 2024 and sell it today you would earn a total of 8.00 from holding Cerrado Gold or generate 34.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Cerrado Gold vs. Novo Resources Corp
Performance |
| Timeline |
| Cerrado Gold |
| Novo Resources Corp |
Cerrado Gold and Novo Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cerrado Gold and Novo Resources
The main advantage of trading using opposite Cerrado Gold and Novo Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cerrado Gold position performs unexpectedly, Novo Resources can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Novo Resources will offset losses from the drop in Novo Resources' long position.| Cerrado Gold vs. Antioquia Gold | Cerrado Gold vs. Red Pine Exploration | Cerrado Gold vs. Bellevue Gold Limited | Cerrado Gold vs. Asante Gold |
| Novo Resources vs. Lion One Metals | Novo Resources vs. Irving Resources | Novo Resources vs. Eloro Resources | Novo Resources vs. Eskay Mining Corp |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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